Appellate Court Affirms Cadiz Project’s Environmental Approvals

On May 10, the Fourth Appellate District in California’s Court of Appeal affirmed all six decisions by an Orange County Superior Court validating the environmental approvals for the Cadiz Valley Water Conservation, Recovery & Storage Project. “We are extremely grateful for the Appellate Court opinion and its validation of the environmental review and approval of the Water Project,” said Cadiz CEO Scott Slater.

The Appellate Court issued six opinions addressing appeals filed by Delaware Tetra Technologies (brine mining operator down gradient from the Cadiz Project) and an environmental coalition lead by the Center for Biological Diversity, San Bernardino County Valley Audubon Society, Sierra Club and the National Parks Conservation Association. Before turning to the decisions, it is useful to summarize the Cadiz Project and environmental reviews challenged by plaintiffs.

Cadiz Project
The Cadiz Project overlies the Cadiz Valley and Fenner Valley aquifer system in the Mojave Desert. The groundwater flows down gradient to two dry lakes, where it mixes with highly saline groundwater and evaporates. A stated objective of the project is to save groundwater lost to evaporation and excess salinity.
The Project proposes to extract an average amount of 50,000 AF per year over 50 years (2.5 million AF cumulative total). Annual extractions may increase to 75,000 AF in any year (subject to the 2.5 million AF cumulative total).

Groundwater pumping is subject to a Groundwater Management, Monitoring and Mitigation Plan (“Groundwater Plan”). The Groundwater Plan is the joint effort of the Cadiz Company, Santa Margarita Water District (lead environmental agency), San Bernardino County (responsible agency) and Fenner Valley Mutual Water Company (a non-profit operating company to delivery project water to project participants at cost).

The Groundwater Plan is designed to avoid significant adverse impacts and “undesirable results” to critical resources within the region, including:
* Groundwater aquifers tapped by the project
* Local springs in the Fenner Watershed
* Brine resources of Bristol and Cadiz Dry Lakes
* Air quality in the Mojave Desert region
* Vegetation in the Mojave Desert region
* Adjacent areas, including the Colorado River and its tributary sources of water

The Groundwater Plan utilizes a network of monitoring facilities and data collection to track the impact of the Cadiz Project.

Mitigation will occur if and when “action criteria” are triggered by deviations from baseline conditions and groundwater model predictions. Review of triggering events will determine whether the conditions are attributable to or exacerbated by the Cadiz Project operations. There are many different criteria for action in the Groundwater Plan: third party wells, land subsidence, induced flow of lower-quality water from Bristol and Cadiz Dry Lakes, brine resources underlying Bristol and Cadiz Dry Lakes, adjacent basins including the Colorado River and its tributary sources of water, springs, air quality, management of a groundwater floor, and project vegetation.

The groundwater floor is a key criterion as it sets “a designated maximum drawdown elevation in the Project wellfield and helps assess trends and operate the Project in a manner that avoids Undesirable Results or other physical impacts.” The Groundwater Plan describes the floor in great technical detail and only allows reductions below the floor (3 consecutive years of less) under two conditions: no management criteria or corrective actions were triggered, and average groundwater levels must remain at or above the floor as measured on a 10-year average. The Groundwater Plan has a procedure for revisiting the floor after 15 years.

Corrective measures to manage or avoid elevations falling below the groundwater floor are reduction in groundwater pumping, moving well locations and stoppage of groundwater pumping for a duration necessary to correct problems.

Project Environmental Review

Santa Margarita Water District commenced environmental review as the lead public agency in a public-private partnership with Cadiz in 2011. The County of San Bernardino County participated as a responsible agency. The County has a groundwater ordinance that requires the pumping at permitted wells does not exceed safe yield or a district or person has met two conditions:

* Adopted a groundwater management plan which adheres to “groundwater safe yield” and “aquifer health” conditions of the ordinance, or developed a County-approved groundwater management, monitoring and mitigation plan consistent with guidelines developed by the County; and

* Executed a Memorandum of Understanding with County requiring the parties to share monitoring information and assures that the County-approved groundwater management, monitoring and mitigation plan is fully implemented and enforced.

Santa Margarita, Cadiz, San Bernardino County and Fenner Valley negotiated the Memorandum in which the parties agreed the Groundwater Plan would be developed in connection with the finalization of environmental review. The Cadiz Project could not proceed unless the parties completed the plan based on information from the finalized Environmental Impact Report.

San Bernardino County then approved a resolution finding that the Memorandum of Understanding for the Groundwater Plan satisfied the exclusion provisions of its Groundwater Ordinance, authorized execution of the Memorandum, and found that the approval and execution did not require environmental review.

Santa Margarita subsequently completed and certified environmental review. Two months later, San Bernardino County adopted the environmental findings and statement of overriding considerations, found the certified environmental documents were sufficient, approved the Groundwater Plan, and found the Groundwater Plan and Memorandum qualified the Cadiz Project for exclusion from the requirements of the County’s Groundwater Ordinance.

Legal Challenges and Appellate Court Decision

The plaintiffs alleged a variety of legal challenges to the project approvals and environmental review of the Cadiz Project. Four of the decisions address objections by Delaware Tetra Technologies and two by the environmental coalition.

Delaware Tetra Technologies

In an opinion partly certificated for publication (“G05058”), the Appellate Court held that environmental review was not required before San Bernardino County approved the Memorandum of Understanding for the Groundwater Plan. The Memorandum did not commit the County to approve the project. Instead, the Memorandum establishes a process for completing the Groundwater Plan. After the Groundwater Plan is completed, the County retains full discretion to approve the project, disapprove the project, or require additional mitigation measures or alternatives. The Memorandum is subject to modification depending on mitigation measures necessitated by environmental review and the County’s groundwater ordinance.

In an unpublished opinion (“G050864”), the Appellate Court applied the above reasoning to conclude that environmental review was not required before Santa Margarita approved the Memorandum of Understanding for the Groundwater Plan.

In another unpublished opinion (“G056869”), the Appellate Court held that Santa Margarita did not violate the California Environmental Quality Act (“CEQA”) when it certified its environmental review with a draft Groundwater Plan. The new information included in the final version of the Groundwater Plan did not trigger the need for recirculation of Santa Margarita’s environmental review.

Another unpublished opinion (“G050881”) rejected Delaware Tetra Technologies final procedural challenges. The Appellate Court held that the Cadiz Project clearly complied with the County’s ordinance rules for obtaining an exclusion from its requirements. The Appellate Court held that the ordinance did not require the Groundwater Plan be approved before the Memorandum of Understanding and that the final plan was consistent with the memorandum.

Environmental Coalition

In a published opinion (“G051058”), the Appellate Court rejected procedural challenges to the project’s environmental review. It held that Santa Margarita was properly designated the lead agency for environmental review. The Appellate Court published the opinion to address the issue of how public/private partnerships should be analyzed under CEQA guidelines. It concluded that for a public/private partnership, the lead agency for environmental review may be (1) the public agency in the partnership, or (2) the public agency with the greatest responsibility for supervising or approving the project as a whole. The Appellate Court concluded that Santa Margarita met both criteria. The Appellate Court found that claims about misleading or inaccurate project descriptions were unfounded.

In an unpublished opinion (“G052080”), the Appellate Court rejected other challenges. It held that the project did not violate the County’s groundwater ordinance because it expressly met the conditions for exclusion. The County’s approval of the Memorandum before the Final Plan was appropriate. Finally, the Appellate Court concluded that the Cadiz Project is consistent with the reasonable and beneficial use standard of California law.

Implications

Aside from the obvious implications for the Cadiz Project, the Appellate Court decisions provide two lessons for water projects. Under CEQA, the public agency of a public/private partnership can be the lead
agency for environmental review, especially if it has the greatest responsibility for supervising or approving the project as a whole. “Monitoring, management and mitigation” will become the “3Ms” of water projects. San Bernardino County’s groundwater ordinance provides a useful framework for adaptive project management. The specifics of the Cadiz Project’s Groundwater Monitoring, Management and Mitigation Plan warrants study. Quantitative criteria for triggering actions (using baseline conditions and model predictions) provide the opportunity to translate disputes over the actual environmental impact of projects into a framework for 3M plans. By holding projects accountable for their projections, this increases the incentive for project proponents to invest in science, which becomes more a tool of risk assessment than rhetoric.